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December 23,2011   

Egypt has little choice but to return to the IMF to help it find up to $15 billion to stave off a full-blown financial crisis, but the ruling army seems to be stalling to avoid blame for approaching a foreign institution for cash on its watch.

http://www.chicagotribune.com/news/sns-rt-us-egypt-economytre7bm0iw-20111223,0,271416.story

30-11-2011

اليوم,السؤال الذي يواجه منطقة بأكملها تعيش في ظل الثورات ما هي الخطوة التالية؟ الربيع العربي فاجأ العالم و لذلك ليست مفاجاة أن يكون هناك خطة مفصلة لمعرفة الخطوات التالية .

http://www.thejakartapost.com/news/2011/11/29/looking-eastward-after-arab-spring.html

November 30,2011

Ahead of the polls, parliamentary candidates laid out their economic visions for Egypt during the transition to democracy. But while many tout “social justice” as their main goal, what’s less clear is how this will be achieved as the current focus is more on political concerns over drafting the constitution.

http://www.thedailynewsegypt.com/egypt-elections-2011/as-egyptians-vote-economic-policies-remain-murky.html

November 30, 2011

The scope of foreign investments for the entire region has dropped by some 83 percent, from over $20 billion to less than $5 billion, and that the expected growth in Egypt, according to the World Bank, will be no more than 1.2 percent, as compared to the country’s economic growth under Mubarak’s reign, which reached 5.5 percent during his last year in office.

http://www.haaretz.com/print-edition/features/from-arab-spring-to-economic-winter-1.398576

“There’s a Chevrolet for everyone, ” read an advertisement at one of the many car dealships that are popping up in downtown Quito. My immediate thought after reading that was, “Good Lord I hope not….” Don’t get me wrong – I don’t have anything against Chevrolet, nor do I really know that much about the company. But what I do know is that never in my life have I seen more traffic (and I’m from Chicago… the land of endless construction) than what I’ve witnessed over the past few days in metro-Quito. On my way home that same day while sitting in more traffic, I saw an advertisment that said “Compra Petro-Ecuador” (Buy Ecuadorian petroleum), and later that night I watched a public service advertisement practically beg Ecuadorians to vote AGAINST drilling for oil in the Yasuni National Forest. Now Ecuador, I know you need to dream big… but how you ‘gonna put every one of your 14 million citizens in a Chevy, ask them to buy Ecuadorian gasoline (which is in limited supply as it is), and all the while cease drilling for more oil in your precious forests?? Looks like Ecuador is about to (if they haven’t already) find themselves in a sticky situation. Let’s dive in a bit deeper…

4 years ago when I was studying here, it took about 15-20 minutes to get from my town of Cumbaya to Quito – a distance of about 10 miles. Not bad, right? Today, on my way to Quito, it took 15 minutes to move less than… wait for it… a QUARTER MILE! Is this for real?? Needless to say I was incredibly late for my appointment, even according to Latin time. Traffic is pretty standard in most big cities, and I get that. But Ecuador’s population has only grown by less than 2% in the past 10 years, and mostly in rural areas. So how is it that all this traffic came about (not to mention, increased greenhouse gas emissions less than 50 miles from the edge of the world’s lungs…aka the Amazon rainforest)?

Well, as is happening in a lot of emerging markets that have experienced economic growth from oil exportation, consumerism is the new fashion drug. If you can afford a car, or at least the loan payments that Ecuadorian banks will gladly offer you at criminal interest rates, then you mostly have a car or two. Public transportation? Forget it… Why ride with those of a lower economic status when you can turn a blind eye to the have-nots and relax in an air conditioned car (when its sunny and 65 outside) listening to American one hit wonders from the 80′s? No, no, no… you would not be caught dead on a public bus. As my host brother relayed to me this morning, having a nice car for everyone who drives in your family is a status symbol. For instance, if you have two children both of driving age who go to the same university, they’ll probably each take their own cars to school. (I know this happens in the US as well, and I don’t agree with it there, either).

Now the busses in Ecuador aren’t exactly the nicest vehicles you’ve ever seen. They can be very crowded and loud. But they’re cheap ($0.25 a ride), get you pretty much everywhere you need to go, and yesterday got me to my appointment sooner than any car could have since most busses have their own lane.

In Ecuador’s defense, they did try to implement a program called “Pico y Placa.” This program basically dictates which days your car can ciruclate in Quito during rush hour (pico), based on the last number on your license plate (placa). In theory, it sounds good. But in practice, instead of taking the bus on certain days of the week, those who could afford it just bought another car or two making sure the license plates allowed them to drive all days.

Some of you might be asking why they just don’t widen the roads? While this is definitely an option in certain places, and its being done.  But Quito rests in the middle of the Andes mountains, with the surrounding metro area below in the valley. To get up to Quito is to take a series of switchbacks…. and when was the last time you saw a 6-lane switchback up a mountain?

The worse thing of all of this is that because of all the traffic, it takes the the city busses that go between the valley and Quito a longer time to complete each route. And because each bus now can’t pick up as many passengers in a day as it used to, there are talks of raising bus fares to compensate for the loss in profits. The majority of people who ride the bus are of the lowest economic class in Quito. A fare increase for them means a decrease in the little expendable income they have for themselves and their families. This alone is one of the many factors that assists in widening the gap between the rich and the poor in Ecuador.

While there is a solution to this traffic problem, it’s not a simple one. I’ll most certainly be thinking about it on my way to Coca (in the Amazon!) tomorrow morning. The next time you’ll hear from me I’ll probably be writing from my hammock overlooking the Napo river. As always, sending muchos besos y abrazos!

http://www.americanselect.org/

Olayan School of Business, American University of Beirut

Thursday, July 29th

Over looking the Mediterranean on waterfront property, AUB is one of the finest Universities in the Middle East.  Yesterday I had the pleasure of meeting with one of their B School’s senior individuals and a huge proponent of social entrepreneurship, Tony Feghali.

We discussed the potential for partnership between AUB and VilCap, and I am extremely optimistic about future collaboration.  Tony has been working hard to make entrepreneurship, and more specifically social entrepreneurship, a staple of the University.

Tony shares my viewpoint, which is that Lebanon has massive potential, often over shadowed by politics- whether they be in the past or more current.  There are huge opportunities in agribusiness, clean water distribution, and other projects relating to infrastructure

Tony and AUB will be hosting an enterpreneurship workshop in November, and we hope to devote an entire day to VilCap related topics.

Endeavor, Lebanon

Thursday, July 29th

Endeavor is a fantastic non-profit organization, that provides all the expertise, network, and support of a Venture Capitalist, just not the capital.  This is important, because in many parts of the world, a little capital goes a long ways, but the scalability is extremely labor intensive.  This is very similiar to VilCap’s philosophy.  Endeavor accepts just 4% of applicants, and has an extremely high success rate with those entrepreneurs.

Cameron Miller, fellow FM Scout and intern at Endeavor this summer, as well as Tania of Berytech connected me with Tarek Sadi, Managing Director of Endeavor Lebanon.  Tarek and I had a very interesting conversation about two their enterprise which will be looking for working capital to scale in the coming months.  One is social media advertising firm, targetting the Arab world.  Web based advertising products in the Arab world are a $19 million market, and are suspected to grow to $400 million in the next 2-3 years.  Endeavors company is uniquely positioned to tap into this market, as they focus almost exclusively on the Arabic speaking world.  The other enterprise is an enterprise that exports fine Lebanese artisan products, doing about $3-$5 million a year in Revenue.  The enterprise employes about 40-50 people directly and 150 people indirectly.  Lebanon was once the center of glass production in the world, meanwhile there is currently only one glass blower in the country.  This enterprise is interesting in that many of these artisan enterprises that are part of their supply chain, might not exist had it they not come into play as a buyer.

Additionally, Tarek and I talked about the democratization of the internet, and what has happened this Spring in the Arab world.  We discussed how one could make an argument that twitter and Facebook where the two strongest proponents of social good in the region, this past year, therefore contributing to an ever refined understanding of what social impact means.  Context is everything, and the political climate is perhaps one of the more important contributors in this part of the world.

Tarek, his team, and organization, are extremely passionate about entrepreneurship in the region.  It will be inspiring to see what Endeavor Lebanon continues to accomplish, after only 6 months since its inception in the country.

My apologies that I have not updated my blog in a few days.  I arrived in Beirut 7 days ago and there has been a lot of action, which I will share with you in detail.

Berytech Technology and Health, Incubator

Monday, July 25th

I met with Tania Mazrani this morning, Director of Berytech Technology and Health.  She has been nothing but helpful as I began exploring the entrepreneurship climate here in Lebanon, even before my arrival. Berytech is a non-profit incubator/accelerator, that offers a number of other start up and SME services.  They are housed in a beautiful 11 story building in one of Beirut’s business districts, and is an extremely well run operation.

Berytech's downtown building

Tania and I went through the Village Capital program template and had a long discussion around the viability of the model in Beirut.  She is extremely optimistic about what we are looking to accomplish as we discussed some of the finer points of entrepreneurial culture in Lebanon.  One huge point of importance in regards to Vil Cap, is that the 16-20 strong cohort of entrepreneurs see themselves as ‘team mates,’ and less as competitors, all vying for the same pot of capital.  One of the ways we may over come this is by focusing on the concept that ‘ideas are cheap.’  There are a lot of great ideas out there, however whether in Beirut, Lebanon, or Palo Alto, California, the ability to execute a highly profitable business out of a strong concept is the key.  If we are able to drive this point home, as well as successfully break the ice in our first couple of gatherings, there should be a greater free flow of ideas among the entrepreneurs.

One of Berytech's meeting spaces

Berytech is extremely well established in Lebanon, with a number of international and regional partners as well.  First Light Ventures and Vil Cap hope to bring even more international expertise and exposure to the incubator, as we explore ways for them to break into the social impact space.

Berytech Fund

Friday, July 22nd

Last week I had the pleasure of meeting with an analyst and  portfolio manager from the Berytech Fund.  Berytech Fund makes venture capital and equity-related investments in start-up information, communication & technology (ICT) portfolio companies in Lebanon.  They have about USD $6 million under management, and while they are small, they are a perfect example of ‘smart capital.’  While they are a completely seperate entity from the Berytech Incubators, they are connected in some significant ways, and have made investments in some of Berytech’s most successful startups.

Berytech Fund and Technology Incubator ("on the hill")

They asked a number of questions related to First Light Venture’s investing philosophy and investment criteria.  One of the main problems addressed, especially in the high-tech/clean tech space, was the lack of access to the quantity of skilled engineers and scientists needed to launch some of the projects that are highly viable in the country and region.  For instance algae farming for biofuels in the Mediterranean.  Based on a number of factors, farming algae is ideal in this climate, but unfortunately, Lebanon has been unable to import talent for this kind of project yet.

In general, the Angel/VC startup culture is nascent in Beirut, and the fund, which has been around for only 3 years, is doing tremendous work in spite of this fact.  Hopefully, international exposure through FLV and VilCap can help nurture some of their exits.

2Bdesign

Thursday, July 21st

After talking with Raja a month ago, I was very impressed by 2Bdesign, and talked about them in my last post.  I was even more impressed when I visited them at their workshop.  Raja and his partner and founder Benidicte are travelling to New York and Paris to showcase their high end pieces which will typically sell from between USD $400-$600 a unit.  2B purchases salvaged rod iron from 19th and early 20th century homes that are being demolished to make room for high-rises.  The rod iron then makes its way to an NGO that runs an iron smith and employ’s individuals from the BoP.  2B is now subsidizing the salaries of those individuals employed by the NGO to produce livable wages as well as paying their own employees who are differently abled and/or from the BoP.  There is something innately beautiful about people from poverty and disabilities, scrap into something that is both full of art and extremely valuable.

80% of 2B’s sales are outside of Lebanon, while over half of the sales within Lebanon are to foreigners.  It is not hard to understand, however, why this art would have more value outside of Lebanon.  It is not uncommon for us humans to find more value in other’s cultures or for other’s find more value in our own, than we do.

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As 2B scales they are actively looking for distribution partners in the US and Europe.  They are targeting the US more, where 19th and early 20th century is considered ‘old.’

Alt City

Wednesday, July 20th

Last week, my first meeting was with David Munir of Alt City, and formerly Root Space.  David is a veteran to social entrepreneurship space, and extremely well read on the region and the issues facing social entrepreneurship.  Additionally, David has been responsible for helping to organize MENA related events at SOCAP, the premier forum for social impact investing and social impact enterprises.

Alt-City's new space in Hamra

I had the pleasure of seeing Alt-City’s brand new space in the trendy and artsy Hamra district of Beirut.  When I visited him he, as well as a number of staff and volunteers, were hard at work get the space ready for this week full of media collaboration and education events.  I was extremely impressed by David’s talent as an individual, and equally impressed by the fact that he was able to inspire and mobilize an army to help him make his new collaboration and incubation space a reality.  I believe that David and Alt-City can be a strong partner for Vil Cap in Beirut as they establish themselves as a force for social impact.

David's army, in anticipation of AltMedia Experience Week

Next month I will be heading to Beirut to source deals for investment partners.  I have goals on two levels; professional and personal.

My professional goal is to source deals for my investment partners, First Light Ventures and New World Innovation.

My personal goal is to prove that Lebanon is a place of economic strength, resilience, and ultimately has a lot more to offer than is portrayed in the lame stream media.

We are currently exploring a partnership with Berytech, an incubator and accelerator in Beirut. Things look promising as Berytech has been around for over 10 years, and has incubated and invested in some very successful enterprises.

A huge question I have, is what exactly the enterprises will look like. I am sourcing deals based on my investors’ interests, which center around positive social impact. In Lebanon, it is unclear what the enterprises will look like and what social impact may be in the context of political instability, unemployment, and intermittent violence. The wise thing to do is to hold off pre-conceived notions of what I might define as social impact, and see what is happening when I get there. I certainly will be looking to take enterprises on the cusp of ‘investability’ towards scalability, and maybe I can do the same for entrepreneurs that have not more than loosely defined their social impact oriented goals.